Australians are not doing it tough

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Not Doing It ToughThroughout the 2013 Federal election campaign, both major parties have pledged to address ‘cost of living’ pressures. Kevin Rudd used the phrase 14 times during a press conference the day after calling the election, and the Liberal Party includes ‘cost of living’ among its 11-point criticism of Labor on its campaign website. Tony Abbott’s recent announcement of a generous paid parental leave scheme is another example of tapping into middle-class anxiety over making ends meet. But is the average Australian household really ‘doing it tough’? 

In May 2012, AMP and the National Centre for Social and Economic Modelling (NATSEM) released a report that argued rising prices were only half the picture: ‘…of greater importance is how incomes change relative to prices. This is what determines the financial standard of living for households.’ After all, if prices rise by 5 per cent but incomes rise by 10 per cent, households are better off, even if the cost of a litre of petrol reaches a new pinnacle.

The report found that from the period 1984 to 2009-2010, living costs increased by 164 per cent, but average disposable incomes increased by 217 per cent. This meant that households in 2009-2010 had around $224 per week extra spending money than they did 25 years earlier.

Ah, but what about the cost of living for Rudd’s proverbial ‘working families’? Aren’t couples with mortgages and kids spending more on the basics? The report tested this by splitting expenditure into three categories: basic necessities, relative necessities and discretionary items. For Australian households as a whole, there was little evidence of spending a greater proportion on the basics such as shelter, food and clothing. As for working families, the historical data showed ‘that this group, more than any other, has increased spending towards discretionary items while maintaining a steady proportion of basic necessities’. For many Australians, what’s increasing isn’t the cost of living, but the cost of lifestyle.

The report was released in 2012, and energy prices have risen since then. But in August this year PolitiFact tested Rudd’s claim that Australian families were ‘all struggling from cost of living pressures’ and found that although the total price of items bought from a typical pay packet climbed by 2.4 per cent over the past year, the pay packet itself climbed by 3.1 per cent. Once again, it’s a case of income outpacing living costs.

A quick comparison with the economies of other industrialised nations confirms that Australians have nothing to complain about. The annual disposable income of the average Aussie household is more than US$5800 above the OECD average. ‘The Australian economy has experienced continuous growth and features low unemployment, contained inflation, very low public debt, and a strong and stable financial system,’ explains the CIA’s World Factbook. We also largely escaped the Global Financial Crisis.

If we broaden the comparison to include all the world’s countries, our howls of struggling to survive start to sound like the whinging of spoilt brats. The World Factbook ranks Australia’s Gross Domestic Product (GDP) per person as twentieth out of 229 countries, but that only accounts for the financial aspects of living standards. The UN’s Human Development Index, which uses a broader range of measures (including health, education and inequality), ranks Australia second out of 186 countries.

This isn’t to say Australia doesn’t have people living in poverty. John Falzon, CEO of St Vincent Paul de Society National Council of Australia, recently pointed out in Eureka Street that there are more than 105,000 homeless people in our country. A minority of the population is genuinely struggling due to degrading circumstances such as long-term unemployment or socio-economic disadvantage. But ‘cost of living’ political rhetoric is explicitly aimed at ‘ordinary Australians’, and the international figures show the average Aussie is very well off indeed.

If we’re so rich, why do we cry poor? It would be easy to blame political speeches that evoke the myth of the ‘little Aussie battler’, who struggles gallantly forward in the face of perceived financial hardship. But the reason for our self-perception of doing it tough runs deeper.

Once people are above the breadline, poverty becomes relative. In his seminal work on the ‘income-happiness paradox’, economist Richard Easterlin argued there was a ‘consumption norm’ which provides a common point of reference for appraising personal wellbeing, ‘leading those below the norm to feel less happy and those above the norm, more happy’. In other words, once you have the basics sorted, your wellbeing is the result of your perceived place in society rather an objective measure of wealth. What matters for whether you feel ‘rich’ or ‘poor’ is your reference group – the people to whom you compare yourself.

Although Australians are extremely wealthy in a global sense, we don’t always feel wealthy because our reference group is largely domestic – we are comparing ourselves to each other. When your friends, co-workers and neighbours are as rich as you are, it’s easy to fool yourself into thinking that the unprecedented luxury and convenience around you is nothing special. You can become blind to your own privilege. 

Worse still, aspirational advertising and the cult of celebrity prompt people to compare themselves to an even richer set of peers. The desired standard of living soars ever higher, and the little Aussie battler is beset with anxiety not because he’s struggling to pay for basic necessities, but because he can’t keep up with rising social expectations. 

So if wealth and poverty are relative, the question becomes this: to whom should we compare ourselves?

In 2012 my partner and I went on a nine-month research trip exploring the idea of ‘voluntary simplicity’, a philosophy that involves reducing material consumption in order to focus on the personal, emotional or spiritual aspects of life. We met several families who said they’d raised children on very low incomes, but they didn’t complain about ‘cost of living’. They recognised that although they were poor by Australian standards, they were still rich in global terms. A man with two young boys told me he’d once fed his modest annual income into a website called globalrichlist.com and was shocked to discover that he was the ninety-seventh millionth richest person in the world.

This is the proper perspective from which to assess our wealth – in comparison to the average world citizen. Once we realise that in a global context most Australians are incredibly rich, we’ll start to feel happy with what we have, rather than feeling hard done by because we aren’t as fabulously wealthy as people on the next social rung.

Australians, on the whole, are not doing it tough. It’s time we stopped whinging about First World problems and started counting our blessings. 


Greg Foyster headshot

Greg Foyster is the author of Changing Gears: A Pedal-Powered Detour from the Rat Race, out now through Affirm Press.


Topic tags: Greg Foyster, economics, politics, cost of living, election, Rudd, Abbott, wages


 

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“There are people in the world so hungry, that God cannot appear to them except in the form of bread.” Mahatma Gandhi
Bernstein | 30 August 2013


A week from today I'll be walking to my nearest polling booth (a church hall) to choose, to my way of thinking, the most generous and caring candidate for my electorate. I'll be walking through bushland where magpies are currently nesting, so I'll need to be wearing an ice cream container hat. I'll try to be thinking of the many people in the world who don't have enough bread, let alone ice cream, and who aren't fortunate enough to be voting in a democratic election. Generosity - one of the great virtues and something we can all practice.
Pam | 31 August 2013


Pensioners are doing it tough.
Terry Fitzgerald | 02 September 2013


Not sure whether your implying the middle-class shouldn't complain regarding their disposal income because essentially their income and employment is fairly stable, where those with low-incomes would struggle to fit in to this myopic piece. Yes we fare better globally, yet we still have pockets within society that face extreme poverty in the face of a gov that has the capacity to do something, but choose not to. Should we complain?
Billie | 02 September 2013


Thank you Greg.So good to have a real report to read, and as the very fortunate people we are we have not shown much generosity,sadly lost our compassion as we have become greedy (affluent).Our national claim to being fair minded, fair dinkum is hollow, and a sham. We are generous when it serves our interests.Like cold hard cash we have no heart or soul. Social reform begins with inclusivity.
Catherine | 02 September 2013


I don't fit into any of the "regular" categories trotted out by the political parties regarding income /expenditure. I am a single,self funded retiree whose allocated pension is the same as the pension. I live simply and am 50 klms from the CBD. Significant rises in rates, utility bills and petrol are eroding my "income" at a faster rate each year. It is becoming a real worry.
Marie Hardwick | 02 September 2013


Thanks for these facts, Greg! It's good to have the sources you quote, when I'm talking to my whingeing friends! Their sense of entitlement drives me up the wall!
Nathalie | 02 September 2013


A timely and truthful article. When I was growing up, my mother used to admonish my siblings and me if we refused to eat something saying, 'there are children in the world who have no food'. Remembering this many decades later makes me appreciate the large and small mercies the majority of Australians receive every day.
Patricia R | 02 September 2013


Certainly some pensioners may be doing it tough. They don't necessarily have the rise in income to offset the rise in energy prices. And some families may be doing it tough too. At an individual level, there will always be people who are struggling, even within a very wealthy society. But my argument is that, on the whole, Australians are doing very well. It is an argument made on the national level, relying on international data to put our wealth in context.
Greg Foyster | 02 September 2013


Thanks Greg. What a relief to get a mature view of our country`s reality after the puerile nature of the so-called election contest; a contest of spin and appealing to the nation`s lowest common denominator of superficiality and "hip pocket nerve". We also need to remember that we have a 4% or so structural fiscal deficit and are already paying $11billion interest per year for the government living beyond its income and that at a time of low interest rates. And sum is going to rise steadily into the distant future and rapidly if/when interest rates go up, because no-one in this election was prepared to square with the public on the urgent changes needed. We need to rebalance the books, focus public spending on infrastructure for future wellbeing and on those in our society who actually need our support rather than all those who just want access to the trough! For those whom have seen the film "Bling Ring", does it remind you of there adolescent nature of Australia and Australian politics at the moment?
Eugene | 02 September 2013


What Greg fails to mention in his thoughtful article is that the wealthy 5% have taken up much more of the wealth than the lower 80%. This is what needs to be addressed. And also we have 105,000 homeless people but we also have the same number of empty dwellings which could house them. No wonder that there is a pervading sense that things are just not quite right and nothing is being done. Another important aspect in all this is that people can cope with wherever they are on the social/economic ladder but full of fear at the thought of falling down to the next step. Even in a country as rich as Australia most working people live in fear of losing their jobs at some stage. Greg has not convinced me that there is not something vastly wrong with the way we distribute our wealth, our incomes and our taxes in this country. I for one am not inclined to accept the status quo which I feel that Greg is asking me to do.
Anne Schmid | 02 September 2013


We all have our own idea of what 'doing it tough' means. For many of us, it ' only going out for dinner once a month'. For others, it's not being able to pay for the dental work your child needs right now. Still, none of us are doing it tough in the way most people in the world are. I'd like to know who issued the anti-Labor election card found in my post box recently. It portrayed a very anxious man poring over his bills, as a result, we're told, of Labor's policies. "Clippings" from the Herald Sun and the Australian support this argument, providing statistics such as those Greg refutes in his article. In whose interest is it to encourage us to think we're ill-done-by? When are we going to use our brains to think with and our hearts to love, instead of relying on the 'analysis' of those who profit by our greed? And what's happening to our democracy? Who's really in charge here?
Joan Seymour | 02 September 2013


If prices rise by 5% and incomes rise by 10% in $ language, what do pension rises have to be please for parity? Is that pension rise in percentage terms realistic? Yes, by global terms we pensioners are rich indeed. For starters there ARE pensions and a level of income security! In what percentage of countries in the world does that put Australia?
Carol McDonough | 02 September 2013


Those Australians who are NOT part of the private or public sector managerial class ARE doing it tough. Pay rises and other benefits are often higher than the Consumer Price Index (CPI) for management compared to frontline employees who often receive less than the CPI.
Michael Webb | 02 September 2013


Not "TUFF"...wait until Tony Abbott stops the boats....no more Manly ferries?.
john m costigan | 03 September 2013


It is because Australian are whinging although without cause that Rudd felt it necessary to associate with them by talking about cost of living pressures Of course Greg Foyster is right but how many votes would a politician in Australia get if he/she said "stop whinging you've never had it so good" It all speaks to the honesty of politics today and tyhe greed in the community
Bede Hickey | 06 September 2013


Except for the relatively few unfortunate homeless - homeless for a variety of reasons - Australians have not done it tough since the 1930s and World War 2. The middle class have become more greedy, more insular, more uncaring for those in real need. Most seem to be bringing up spoilt rotten children. It is shameful. To me, the last straw was the cutting of Foreign Aid by the incoming, I'm afraid, Abbott government! That this rich First World country will cut precious aid to the Third World is a disgrace. We are already the laughing stock of the World. Appalling, Tony Abbott. You won't get my vote!
Louw | 06 September 2013


Being 50 I feel that I'm in that inbetween age, remembering that of childhood, but realising the pressures of modern day society. Modern day parents do have increased pressures faced by them. When I was a child my parents outlay for a state school education was uniform, pens, pencils, a ruler, a rubber, some exercise books and around $20 textbook fee. I was fortunate that I went to guides, played sports and had music lessons. These days parents have to pay for computers and laptops. Many extra circular activity is almost mandatory & more expensive. When people of my grandparents age could live in a shed and gradually saved to build a house. These days that is not an option. When I was in my 20's I didn't own a car, cycling, walking and public transport was fine. These days with the violence, aggression, road rage this is less of an option. When I was young, yes it was a financial struggle same as young people of every generation, but mine was a simpler lifestyle. A single wage could support 2 adults and 2 children. Now people in their 20's & 30's materially have much more, but I wouldn't swap.
Rachel | 06 September 2013


What an amazingly wise head on such young shoulders. Changing Gears relaxed my view of our recent retirement. I thank you. More books, please.
Georgie Bull | 11 January 2017


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